RosalindMathieson

KateO'Keeffe

V.Phani Kumar

Japanese stocks fell sharply, with exporters hit especially hard as the yen strengthened against major currencies. Japanese banks also declined, reversing gains from the previous day, although in Sydney, National Australia Bank led the advance among financials after delivering its strategy report.

"There's more negative sentiment out there. Although a lot of things are good, we haven't reached a point where we've actually resolved the problem within the banking system," said Andrew Sullivan, a trader at Main First Securities.

"The pendulum has swung a bit toward the hope side rather than the fear side," said KGI Asia's Ben Kwong.

The focus Thursday was on data and events: In Japan, fresh data showed that the economy contracted slightly less than initially reported in the fourth quarter, with GDP down 3.2% from the previous quarter, or down 12.1% in annualized terms. The original estimates were a 3.3% on-quarter decline and annualized 12.7% contraction.

Still, the data confirmed a drop in exports, which has battered the economy in recent months.

The Bank of Korea opted to keep interest rates at an all-time low 2.0% after six consecutive cuts in the past four months. The decision was a surprise as most economists polled by Dow Jones had expected further easing.

Australia's February jobs data showed the economy created 1,800 jobs in the month, compared with an expected drop of 20,000. But full-time employment fell 53,800 and the jobless rate rose to 5.2%, its highest level since March 2005.

"Clearly the risk of a deeper and longer downturn for the economy, with no second-half recovery, has risen a bit," said UBS economist Scott Haslem.

National Australia Bank (NAB)
NABZY, +1.01%
added 2.6% in Sydney after it updated investors on its performance. The bank said it plans to restructure some operations and is on the lookout for acquisitions to boost its market presence in Australia, though it also joined Australia & New Zealand Banking Group (ANZ)
ANZBY, +0.86%
in flagging a 25% cut to its interim dividend.

In the tech sector, Japan's Elpida Memory
ELPDF
(6665) dropped 19% as concerns mounted that it may have to scale back its plan to merge with Taiwanese chip makers. Taiwan's government said Wednesday it may buy factories from DRAM makers, rather than acquiring the companies outright.

South Korea's LG Display
LPL, -0.70%
fell 6.5% after Philips Electronics NV sold its remaining 13.2% stake for around 630 million euros. Still, "the fall in its stock price won't be big as the sale will remove the overhang risk in the long run," said Woo Joon-sheik at Tong Yang Securities.

New Zealand shares ended lower, although the Reserve Bank of New Zealand cut the official cash rate by half a percentage point. Fisher & Paykel Healthcare (FPH) was off 2.6%.

Gold stocks were helped in Sydney by a recovery in the price of gold, with Lihir Gold
LIHR
(LGL) up 4.6%, while oil stocks were weighed down by a decline Wednesday in crude-oil prices, with Woodside Petroleum (WPL)
WOPEY, +1.85%
down 2.7%. Likewise, in Hong Kong, Zhaojin Mining Industry Co. (1818) rose 0.8% while Cnooc
CEO, -0.85%
(883) slipped 0.2%.

Spot gold was $3.50 higher at $911.40 an ounce. April Nymex crude oil futures gained 35 cents to $42.68 a barrel on Globex. Futures fell $3.38 or 7.4% in New York as the U.S. government reported stockpiles of crude and distillate fuels swelled last week.

The revised Japanese GDP data aided the yen, with the U.S. dollar down at 96.11 yen, from 97.27 yen late in New York, and the euro at 122.49 yen, against 125.10 yen. The euro was lower against the dollar too, at $1.2746 compared with $1.2854.

Still, Credit Suisse Chief Japan Economist Hiromichi Shirakawa said the Japanese data weren't good news, and merely presaged a larger contraction in the first quarter of 2009.

"We have to foresee a deeper correction in industrial production and anticipate a correction to inventory investment, a very significant one, that should push down GDP in the first quarter," he said.

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